Technical Picture Favours Bears

Week to date, against the US dollar (USD), the price of bitcoin (BTC) is down more than -7.0% and touching gloves with levels not seen since mid-March.

Technically, the longer-term picture exhibits overbought/overvalued conditions. Following the all-time high clocked in early March at $73,845, commitment from buyers has been lacklustre and appears headed for support located just beneath the $60,000 region at $56,796. It is also clear that the Relative Strength Index (RSI) has exited overbought space and is fast approaching indicator trendline support, extended from the low of 23.71.

Adding to the weekly timeframe’s bearish tone is the daily chart, recently venturing south of $64,000 support and retesting the level as a resistance. Further, a bearish pennant pattern was recently completed, meaning traders/investors who follow this chart pattern may apply the take-profit objective (measured by projecting the base value of the pattern and extending this value from the breakout point, as shown on the chart), which, in this case, can be found at $48,257. Note that this level is also nestled just beneath a Fibonacci support area between $51,367 and $53,172 (made up of a 1.618% Fibonacci projection ratio and a 38.2% Fibonacci retracement ratio), which itself is positioned just beneath the weekly support base mentioned above at $56,796.

Sellers Targetting Weekly Support

Having noted the scope to navigate lower levels on the weekly timeframe until support at $56,796 and the break beneath $64,000 on the daily chart, alongside the breakout below the bearish pennant pattern structure, this opens the door for further selling in this market, targeting weekly support as an initial downside objective, followed by the daily Fibonacci support area (which happens to coincide with a weekly decision point at $50,619-$53,057) and the bearish pennant pattern’s take-profit objective, as illustrated above.

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